I thought that the Vita was all download only.
Most every game WILL be downloadable, but you can also get physical copies (so how are we going to handle this on here? maybe we should discuss it in a separate topic
). There will also be downloadable-only games, something akin to PSN games on the PS3.
One thing that's actually done RIGHT this time, unlike the PSP, is that most downloadable versions of retail games are actually going to be a bit cheaper than the physical copies. The only problem here is that you have to get way overpriced memory cards.